The price of gold reached $2,726 today, marking its highest level since November 6, 2024, and it is currently trading near the $2,715 level. Gold has risen by about 7% since the low of November 14, 2024, when it was $2,537, to the peak it reached yesterday at $2,726. It has also risen by about 31% since the beginning of the year to date. The biggest challenge now is for gold to reach the $2,790 level, which is the record high it reached on October 30, 2024.
Factors supporting gold prices include, but are not limited to:
- Gold purchases by central banks: Central banks, especially the People’s Bank of China, continue to purchase gold. China resumed its gold buying in November after a six-month hiatus, adding 160,000 ounces to its reserves, bringing the total to 72.96 million ounces according to official data published on Saturday, November 7. Notably, Chinese citizens are also continuing to buy gold as a hedge against economic uncertainty in China.
- Inflation in the United States: Inflation remains persistent in the United States, where the Consumer Price Index (CPI) for November showed a year-over-year increase of 2.7%, in line with analysts’ expectations but higher than October’s reading of 2.6%. This supports gold as a hedge against inflation.
- Geopolitical tensions: Ongoing geopolitical tensions in the Middle East, in addition to the Russia-Ukraine war, may positively affect gold prices, as it remains a traditional safe haven.
- Trade tensions: The escalation of trade tensions between the United States and China, with both countries imposing restrictions on each other regarding technology, semiconductors, and more, in addition to tensions over the Taiwan issue.
- Interest rates: The U.S. Federal Reserve’s interest rate cuts of 75 basis points this year, with further cuts expected in December 2024 and next year, may positively affect gold.
- Expansion of U.S. debt: The U.S. debt has exceeded 36 trillion dollars, and forecasts suggest that it will continue its upward trajectory.
From a technical perspective, indicators suggest that gold prices are likely to continue rising for the following reasons:
- The 20-day moving average (gray line), currently at around $2,650, is approaching the 50-day moving average (blue line), which stands at around $2,671. A bullish crossover, or “golden cross,” between the two may signal an upward trend for gold.
- The Relative Strength Index (RSI), currently at 60 points, indicates bullish momentum for the yellow metal.
- The MACD indicator (blue line) has crossed above the signal line (orange line), suggesting upward momentum for gold.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
